Did you ever get one of those punches in the solar plexus that leaves you winded for ages? Well, that’s how anybody who’s checked recently on their pension policy is feeling.

Irish pensions are the worst-performing in the developed world, another recession record. According to the Organisation for Economic Co-operation and Development (OECD), they lost 33% of their value between January and October 2008. The international average was 23%.

Many people have seen a year’s contributions, even two years’, wiped out. And they are thinking to themselves: “If I’d just put the money in the bank instead, I’d be better off now.” Furthermore, in the teeth of the worst recession in living memory, when people need money right now, they are not allowed to touch their pension pot for another 20, maybe 30, years. They have to sit there and watch it dwindle.

With the Irish stock market still flatlining, some people have had enough. Susan Byrne, 32, a Dublin office worker, is one of the 800,000 people in occupational pension schemes and is considering pulling out. “Over the past six months I have become disillusioned with the idea of a pension as I see these funds leaking money,” she said.

“I set up a savings account just before Christmas which I make a point of paying into each month as my pension alternative, for when I pull out of the scheme. I plan to save as much as possible, preferably for a deposit on a second home. I’m drawing on as much expertise as I can, and weighing up other investment options. I’m happy to quit while I’m behind, and feel I’m young enough to start over with another mode of savings and investments.”

Byrne says she started her pension only because her company had a scheme. “I have friends who have no interest in pensions and are happy to take a punt in other ways,” she said. “One bought an apartment in Bulgaria, and reckons that’s better than investing in a scheme that relies on a market going nowhere fast.”

The main reason why workers, particularly high earners, have been prepared to pay into pensions is because of the tax reliefs. Not only do employers and employees get relief on what they pay in, there is no tax on investment income and capital gains. You pay tax on the pension when you retire, but even then a tax-free lump-sum of up to 25% can be taken.

Now those tax reliefs are tottering. Because of criticism from left-wing commentators, who claim that the system favours high earners, the government may abolish them in the April 7 emergency budget. Pension reliefs cost about €2.9 billion a year and the Department of Finance is looking for savings. As Mary Hanafin, the social welfare minister, said last week: “Naturally when Finance is looking for money, all tax reliefs come on the table.”

But their removal would be the last straw for many workers paying into pension schemes. There simply would be no incentive, no justification for locking away 10% of their monthly pay cheque into an uncertain fund for decades.

During his career, Frank Lucas, 50, manager of a Dublin company, has had several jobs and only joined an occupational pension scheme three years ago, linking in several private funds as he did so. “I started putting in the maximum contribution in a bid to establish a decent pension fund, and of course, to avail of the tax relief,” he said.

“I checked a couple of months ago to see how it was performing, only to discover that the past three years’ money is gone. Essentially I am back to the level I was in 2005 with my private schemes.

“As you can imagine, I have totally lost faith in the pension market. Even allowing for the tax relief, I’ve decided to opt out of the market for the moment and to start keeping money in cash. I’m waiting to see what Brian Lenihan does. If he takes away the tax relief, I will definitely not invest any more in a pension.”

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